Three eBook Publishers Settle States’ Antitrust Suit

By Jim Tanous

Aug 30th, 2012 5:00 PM EDT

Three book publishers will pay more than US$69 million to settle an antitrust suit with U.S. states based on allegations that the publishers illegally collaborated with Apple to raise the prices of digitally distributed eBooks, Businessweek reported late Wednesday. Hachette, HarperCollins, and Simon & Schuster all reached an agreement to settle with several U.S. states nearly five months after the same publishers settled with the U.S. Department of Justice for similar charges.

Apple and five book publishers were sued by the DOJ and multiple state governments in April for allegedly conspiring to increase the price of eBooks and remove Amazon’s ability to offer eBooks at a lower price by prohibiting books offered by Apple’s iBookstore from being sold for less anywhere else.

Three publishers — Hachette, HarperCollins, and Simon & Schuster — settled almost immediately with the DOJ while Apple, Macmillan, and Penguin vowed to fight the government’s charges.

Apple and the remaining publishers deny that any conspiracy took place and claim that Apple and each publisher independently arrived at the same terms. The group further argues that they did only what was necessary to break an Amazon monopoly on the eBook market.

State and federal prosecutors, however, were not convinced that Amazon’s alleged monopoly could justify the defendants’ actions and they are pressing their case against the remaining companies (U.S. v. Apple, 12-cv-02826, U.S. District Court, Southern District of New York [Manhattan]).

“Unlawful collusion and price-fixing not only violates antitrust laws, it is anti-competitive and inconsistent with the free market approach that is critical to our economy,” Texas Attorney General Greg Abbott said in a written statement.

Florida Attorney General Pam Bondi added that the settlement “will repay consumers affected by the price-fixing scheme and will restore competition in the electronic book market.”

While Apple and its remaining co-defendants continue to fight, the publishers who settled are ready to move past the litigation. “We’re pleased to now have put this matter behind us, and moving forward, to continue our work with authors and accounts to grow the market for books of all formats — and to take advantage of the many opportunities afforded us by publishing in the digital era,” a Simon & Schuster representative said.

The ultimate determination of the DOJ’s legal case is poised to significantly mold the future of eBook distribution. Evidence thus far revealed indicates that Apple and the publishers likely did illegally collaborate to fix eBook prices, but Amazon also held a monopoly on the format at the time.

As far as the DOJ is concerned, however, the issue does not rest on what outcome is best for the industry. The agency’s primary concern is enforcing the laws. For Apple and the remaining publishers, the question from a consumer’s perspective is, “do two wrongs really make a right?”